There have been 39,737 shares sold by insiders during the last 30 days. All these shares were sold pursuant to a Rule 10b5-1 plan.

SEC Rule 10b5-1 is a regulation enacted by the United States Securities and Exchange Commission (SEC) in 2000. The SEC states that Rule 10b5-1 was enacted in order to resolve an unsettled issue over the definition of insider trading, which is prohibited by SEC Rule 10b-5. After Rule 10b5-1 was enacted, the SEC staff publicly took the position that canceling a planned trade made under the safe harbor does not constitute insider trading, even if the person was aware of the inside information when canceling the trade. This staff interpretation raises the possibility that executives can exploit this safe harbor by entering into 10b5-1 trading plans before they have inside information while retaining the option to later cancel those plans based on inside information.

For example, a CEO of a company could call a broker on January 1 and enter into a plan to sell a particular quantity of shares of his company's stock on March 1, find out terrible news about his company on February 1 that will not become public until April 1, and then go forward with the March 1 sale anyway, saving himself from losing money when the bad news becomes public. Under the terms of Rule 10b5-1(b) this is insider trading because the CEO "was aware" of the inside information when he made the trade. But he can assert an affirmative defense under Rule 10b5-1(c), because he planned the trade before he learned the inside information.

In general, it is a safer way for an insider to sell shares pursuant to a Rule 10b5-1 trading plan than without it.

Insider selling by calendar month

Here is a table of F5 Networks' insider-trading activity by calendar month.

Month

Insider selling / shares

Insider buying / shares

February 2014

39,737

0

January 2014

0

0

December 2013

17,580

0

November 2013

13,220

0

October 2013

0

0

September 2013

0

0

August 2013

80,890

0

July 2013

0

0

June 2013

0

0

May 2013

18,142

0

April 2013

0

0

March 2013

0

0

February 2013

108,876

0

January 2013

0

0

Click to enlarge

There have been 278,445 shares sold, and there have been zero shares purchased by insiders since January 2013.

Financials

F5 Networks reported the fiscal 2014 first-quarter, which ended December 31, financial results on January 22 with the following highlights:

Juniper Networks has also seen intensive insider selling during the last 30 days.

Conclusion

There have been seven different insiders selling F5 Networks, and there have not been any insiders buying F5 Networks during the last 30 days. Six of these seven insiders decreased their holdings by more than 10%. F5 Networks has an insider ownership of 0.30%.

Before going short F5 Networks, I would like to get a bearish confirmation from the Point and Figure chart. The two main reasons for the proposed short entry are relatively high P/S ratio, and the intensive insider-selling activity.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.